to be taken with a huge pinch of salt, but MacRumors have dug up some details of what is said to be the next gen iPhone spec's from a Chinese forum and they even have a screen shot showing the 32GB of memory.
The suggested spec's are a pretty solid bump with the CPU hitting 600MHz (the current iPhone has a 400MHz CPU), doubling the RAM from 128MB to 256MB, 32GB of storage, FM radio and the previously rumoured digital compass. The device itself is meant the be radically re-designed as well with changes to the battery, screen and externals.
It this all comes true, it looks like the next iPhone is going to be a fair bit more expensive than the current models, but also a lot more powerful as a device. So far there's still no word on a new iPod Touch which some people are still interested in, although it's possible that Apple wants to sell you an iPhone rather than an iPod Touch and as such they're not interested in upgrading the iPod Touch.